When the Biden administration announced $ 1.1 billion in student loan cancellations for students attending the late ITT Technical Institute in late August, it gave relief to thousands of people who were unable to complete their degrees. Without warning students, in 2016 the for-profit college suddenly closed all of its campuses in 38 states over allegations of financial malfeasance and recruiting.
In addition to helping students after for-profit schools have exploited them, policymakers should focus on preventing student exploitation in the first place.
But while much of the focus on tackling abuse in for-profit higher education has focused on the actions of the federal government, states can also do a lot to protect students from bad actors. .
Before enrolling, potential students from too many for-profit colleges are faced with pressured sales tactics that tackle their “anxieties, stress and fear.”
Problems persist after recruitment. For-profit colleges have lower retention and graduation rates than public and private non-profit institutions.
Although they provide students with inferior education and employment opportunities, many for-profit colleges charge high tuition fees.
Additionally, recent research shows that students who attend for-profit schools are less likely to have a job after graduation and tend to earn less than students who attend public and private for-profit colleges. non-profit.
Yet although they offer inferior education and employment opportunities for students, many for-profit colleges charge high tuition fees. They also often successfully target poorer students and students of color, who then struggle with higher student loan debt than if they had attended a public or private nonprofit institution.
Such predatory practices in higher education are not confined to for-profit colleges, but players in the for-profit sector are by far the worst offenders when it comes to defrauding and deceiving students.
In October, the Biden administration will hold public hearings to begin the process of changing the regulations of key federal student financial aid programs, which could result in tighter protections for student borrowers. One proposal under consideration would prohibit colleges from forcing new students to sign arbitration agreements before they can enroll.
In our view, banning such arbitration agreements would allow states to better regulate for-profit colleges. Such a plan was imposed under the Obama administration and then lifted by the Trump administration.
Unlike most players in other areas of higher education, for-profit colleges routinely use arbitration clauses to protect themselves from lawsuits by students alleging fraud or other wrongdoing.
This means that such claims are decided by a private third party and – unlike opinions issued by state or federal courts – are generally not subject to public disclosure.
For-profit colleges also use arbitration clauses to block class action lawsuits by several students accusing an institution of fraud or other misconduct.
Related: Left in deep trouble by direct for-profit college loans
Banning for-profit colleges from using arbitration to resolve student complaints would help force schools to choose between curbing their worst practices and risking legal action.
Banning colleges from using arbitration clauses as a condition of enrollment would also reignite an important federal-state partnership and ensure that a full range of state legal options are available to students challenging the wrongdoings of predatory colleges for purpose. lucrative.
Additionally, states could pass new rules to further empower students – or their own attorneys general or other state officials – to hold for-profit colleges more accountable.
For example, states could require for-profit providers to make mandatory disclosures to provide greater transparency to prospective or current students and their families.
Our own review of state cases and laws revealed several types of disclosures that some states currently require, including graduation and placement rates for particular programs, student success rates on required licensing or certification exams. and student loan debt information, such as the requirement to repay loans even if a person does not complete a program. California has extended disclosure requirements to institutions other than for-profit schools.
All states should require for-profit colleges to make this information available to all students and prospective students. States have the legal authority to impose disclosure requirements, even if they choose for-profit colleges. In Massachusetts, a federal court largely upheld the rules imposed on for-profit companies.
Massachusetts regulations prohibited the use of deceptive language in communications with students or prospective students and prohibited the use of pressurized sales tactics, which we believe other states should do.
For-profit colleges challenged these restrictions, but most people would agree the requirements were reasonable – limiting calls to potential students to no more than twice a week.
The state has also encouraged transparency by requiring disclosures about the time it typically takes students to complete a program, the consequences of defaulting loans, and graduation and placement rates.
The court struck down only one disclosure rule, relating to information about transferring course credits to other institutions, as being too restrictive.
The disclosures required in Massachusetts show how states can help prospective students make better-informed choices before enrolling in for-profit college.
States can also be more careful about how they spend public financial assistance. Some states restrict the participation of for-profit colleges in state financial aid grant programs. Alternatively, states could cap the amount of grants paid to for-profit colleges.
Such practices will help us use taxpayer dollars responsibly by preventing for-profit colleges from raising prices to maximize state aid. The changes will also reduce incentives for for-profit organizations to target working-class students to enroll in expensive, low-quality programs with limited employment or income prospects.
If properly enforced, state rules can complement federal action while promoting approaches tailored to the unique contexts and needs of students in each state.
Neal Hutchens is professor of higher education at the University of Mississippi; Frank Fernandez is Assistant Professor of Higher Education Administration and Policy at the University of Florida. Macey Edmondson, clinical assistant professor of higher education at the University of Mississippi, contributed.
This story on for-profit college regulation was produced by The Hechinger report, an independent, non-profit news organization focused on inequalities and innovation in education. Sign up for The Hechinger newsletter.